Portugal receives debt downgrade

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16 March 2011, last updated at 08: 26 GMT ratings downgrade will likely make it more expensive for the Portuguese, to borrow money, Moody's has rating Portugal's sovereign debt, citing the country's need, debt and poor growth prospects cut downgraded.

The credit rating agency cut by two notches from A1, A3 Portugal and gave the rating on a negative Outlook, which follow on further downgrades.

Meanwhile, Portugal's opposition party has announced it is strict against the plans of the Government.

The Prime Minister has warned that the country could be a Bail-Out.

"The result of a political crisis would worsen the risks for our economy and to the intervention lead," he said.

Portugal is loaded with high levels of debt and is fighting for an international Bail-Out, to avoid similar as those of Greece and Ireland.

Political deadlock

Prime Minister José Socrates was the latest in a series of cost-cutting measures Government last Friday.

The plans, the cuts to the health and welfare budget, meant investors and EU colleagues say, that it can meet its debt obligations without outside help.

However, the austerity package is met with fierce opposition, and the Prime Minister has warned that the measures win does not support, his country in a Bail-Out can be forced.

The main opposition party has now decided, could formally oppose the plans, lead the political impasse.

This could force the current minority Government overthrow general elections.

"I have fought to prevent this scenario for six months," Mr Socrates said Portuguese television.

Negative outlook

Despite Moody's two notch downgrade, the Agency remains still prices Portugal as "investment grade" and the country several notches above the more risky "speculative grade" ratings, which has occurred after Greece.

Moody's said "the costs of financing market is likely remain high until the deficit has been reduced to sustainable levels and the Outlook for economic growth have improved" in a statement.

Portugal on Wednesday sold 1 billion euro worth of 12-month Treasury bills at an auction.

The return of the debt was seen in a previous sale to the March 2 4.331% from 4.057% but below the record level in December.

Investor demand was also less than at the last auction and earlier this month.

Downgrade is likely to, nor more expensive for Portugal money on international markets to increase.

The country's ten-year cost of borrowing hit a new high of nearly 8% last week, and has more than 7.5% since remained.

Moody's has given a negative Outlook on the new rating, which means that the rating could be downgraded further.

This indicates that Moody's, is not sure that the Portuguese Government on the reforms provide it announced recently.

Standard and poor's, one other credit rating agency, recently announced that debt it also Portugal's A - rating - equivalent to A3 checks Moody's rating - for a possible downgrade.